Keidanren's Activities on Global Warming Issues

Yoshihito IWAMA Keidanren

October, 2012

What is Keidanren ?

�A comprehensive economic organization in Japan

�1,285 major companies, 127 industrial associations, and 47 regional economic organizations(as of March 29, 2012)

�Keidanren's mission is to accelerate growth of Japan's and world economy and to strengthen the corporations to create value to transform Japanese economy into one that is sustainable and driven by the private sector, by encouraging the idea of individuals and local communities.

�Regional partner of World Business Council for Sustainable Development (WBCSD)

Keidanren (Japan Business Federation)

1

1. Develop and provide socially beneficial and safe goods and services that give satisfaction to consumers and customers.

2. Engage in fair, transparent and free competition and ensure that transactions are appropriate. Also, maintain a sound and proper relationship with political bodies and government agencies.

3. In addition to communicating with shareholders, interact extensively with the public, and disclose corporate information actively and fairly. Also, protect and properly manage personal and customer data and other types of information.

4. Respect diversity, character and personality of employees and ensure a safe and comfortable working environment, thereby providing a sense of comfort and richness.

5. Proactively initiate measures in acknowledgment of environmental issues, the common challenges they pose to humanity and their importance to its existence and livelihood.

5.1 Promote efforts to build a low-carbon society on a global scale.

5.2 Promote efforts to build a material-cycle society.

5.3 Take measures against environmental risks.

5.4 Promote efforts to conserve biodiversity and sustainable utilization of resources.

6. Actively engage in community involvement activities including philanthropy as a "good corporate citizen."

7. Resolutely confront antisocial forces and organizations that pose a threat to the order and security of civil society and sever all relations with such individuals and groups.

8. In line with the globalization of business activities, comply with laws and regulations of the countries and regions where its business operations are based and respect human rights and other international norms of behavior. Also, conduct business by taking into consideration the local culture and customs as well as the interests of stakeholders, and contribute toward the development of the local economy and society.

9. Top management recognizes that it is its role to realize the spirit of this Charter and takes the lead in an exemplary manner to implement the Charter within the corporation and its entire corporate group, while encouraging its business counterparts to follow the same example. Furthermore, it should always try to keep abreast of what people inside and outside the corporation say and set up an effective mechanism throughout the corporation to implement the Charter.

10. In case the Charter is violated, top management should clarify both internally and externally that it will take charge to resolve the situation, determine the cause of infringement and make efforts to prevent similar violations in the future. At the same time, top management should promptly make full public disclosure, explain what has occurred, and, upon determining the source of competence and responsibility, impose strict disciplinary action against those held responsible, including top management itself.

Keidanren 's Charter of Corporate BehaviorFor Gaining Public Trust and Rapport

2

Keidanren Global Environment Charter April 23, 1991

General management policies(1) to protect the global environment and improve the local living environment,

(2) to take care to protect ecosystems and conserve resources,

(3) to ensure the environmental soundness of products

(4) to protect the health and safety of employees and citizens.

Establishing corporate organization

Concern for the environment : research, design, manufacturing, production, distribution, appropriate use, and disposal

Technology development

Technology transfers

Emergency measures

Public relations and education

Community relations

Overseas operations

10 Contribution to public policies

11 Response to global problems

Basic philosophy A company's existence is closely bound up with the global environment as well as with the community it is based in. Each company must aim at being a good global corporate citizen, recognizing that grappling with environmental problems is essential to its own existence and its activities.

http://www.keidanren.or.jp/japanese/profile/pro002/p02001.html3

Environment Report

Disclosure

Voluntary Action PlanReduce Reuse Recycle

Harmony between 3ECooperation with employees, govern-ment, consumers

Movement

Voluntary Action Plan

Commitment to a Low Carbon Society

CO2 Emission Reduction

InternationalWBCSD

World Business council for Sustainable Development

IUCN

Conservation of Nature & Bio-Diversity

Committee on Nature Conservation

Supporting NGO through Nature Conservation Fund

Declaration on Nature Conservation

Declaration on Biodiversity

Keidanren Global Environment Charter

April. 23, 1991

4

KeidanrenEnvironment Initiatives

April 1991 Keidanren Global Environment Charter� Each company must aim at being a good global corporate citizen, recognising

that grappling with environmental problems is essential to its own existence and its activities.

July 1996 Keidanren Appeal on Environment� We will take a voluntary, resolute and responsible approach in dealing with

important tasks existing in the environmental field.

June, 1997 Keidanren Voluntary Action Plan on the Environment�Global Warming Measures �Waste Disposal Measures/the Establishment of a

Sound Material-cycle Society

The progress of the Action Plans is reviewed annually.

The History of Keidanren Voluntary Action Plan on the Environment

5

December 1997 Adopted Kyoto Protocol @ COP3

5,902

1,8281,013

942 903 886

890 661 612 624

642

0

1,000

2,000

3,000

4,000

5,000

6,000

1990 2000 2003 2004 2005 2006 2007 2008 2009 2010 2015

Follow-up of Keidanren Action Plan on the Establishment of a Sound Material-cycle Society

�

�

7

38%

40%40%39%39%

37%37%

42%41%

42%43%

45%46%46%

49%

51%52%

51%52%

20%

25%

30%

35%

40%

45%

50%

55%

H2 H4 H6 H8 H9 H11 H13 H15 H17 H19

Resources Reutilization Rate of Industrial Waste

Source: MOE

�Accepted various wastes and by-products from other businesses

the iron and steel industry(various types of slag),the electric utility industry(desulfurization plaster)the tire industry(scrap tires)the metal casting industry(casting sand) local municipalities(sewage sludge and incineration ash)

Cement industry's efforts

Cement industry efforts toward the establishment of a sound material-cycle society

http://www.jcassoc.or.jp/cement/4pdf/jj3h_02.pdf8

About 99% of the by-products involved in the production of steel are recycled.The recycling rate of steel cans is 85%, the top-ranking in the world.Combinations of iron content of slag, a by-product of iron-making, with waste wood chips can artificially supply nutrients needed for the growth of marine plants. This restores life to a desertified sea, restoring a fertile sea with plenty of kelp and marine life.

9

Iron & Steel Industry's Activities on Recycling

Management of Keidanren Nature Conservation FundFundraisingProvision of support to environmental NGO’s nature

conservation projects (1,040 projects for 20years)

Activities of Keidanren Committee on Nature Conservation(Latest important Theme : Biodiversity)

Promotion of collaborations between companies and NGOs

Development of awareness on nature conservation activities among member companies

“Declaration of Nature Conservation by Keidanren” (March 2003)“Declaration of Biodiversity by Keidanren” (March 2009)“ Japan Business and Biodiversity Partnership” (October 2010)Participating in international conferences associated with the

topic 10

Activities of Keidanren Committee on Nature Conservation

11

• Asia (Japan, South Korea and Vietnam) Survey/Awareness-raising Activities for Recovery of Endangered Spoon-billed Sandpiper

• Asia The Asian waterbird Census - promoting waterbird and wetland conservation in the Asia-Pacific region

• Asia Organisation of the "Asian Wetland Symposium (AWS2011)" (Kota Kinabalu, Malaysia, and Wuxi, China) and contribution to the RamsarCOP11 and the CBD_COP11

• Vietnam Improvement of rice cultivation & environmental education

• Indonesia Orangutan protection

• China Ehancing the protection of Black-necked Crane and their wintering areas in Dashanbao Nature Reserve of Yunnan Province through the community involvement and poverty reduction programme

• China Reforestation to prevent desertification

• Thailand Mangrove plantation in Nakhon Si Thammarat Province

• Thailand Distribution of environmental education book

• Ecuador Conservation of ecosystem in Galapagos Islands

Examples of KNCF Supported Projects

Action Guidelines1. Consciousness on nature conservation must be improved.

Nature conservation shall become an important target of environment management. Data of corporate nature conservation activities shall be collected and displayed for starters. Environment education program shall be devised. Ask the central and local governments to further promote education that deepens contacts with nature.

2. Information and knowledge exchange shall be promoted.Fora of NGOs and enterprises shall be created. Database of supported NGO projects shall be created for public viewing. Intellectuals in social science such as anthropology, sociology, and history shall be called for in localizing ways and means of nature conservation activities. Ways and means for NGOs to utilize scientific findings and management know how of corporate sector shall be sought.

3. Nature conservation activities shall be further promoted.Support NGO projects in the area of biological diversity, especially in Asia-Pacific region, including Japan. Nature conservation activities by corporate manager and employee volunteers shall be promoted. Ask government to reform tax scheme on NGOs, major player in nature conservation, to support their financial basis. Ask Japan's government to increase ODA expenditure for NGOs in conservation and protection of global environment and environment education.

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March 17,2003Keidanren Declaration on Nature Conservation

<7 Principles of the Declaration>

1. To appreciate nature's gifts and aim for corporate activities in harmony with the natural environment

2. To act from a global perspective on the biodiversity crisis

3. To act subjectively and steadily to contribute to biodiversity

4. To promote corporate management for sustainable resource use

5. To create an industry, lifestyle and culture that will learn from biodiversity

6. To collaborate with relevant international and national organizations

7. To spearhead activities to build a society that will nurture biodiversity13

Keidanren Declaration on Biodiversity

<Objectives of the Declaration>� To clarify the basic principle and the viewpoints for companies working

on biodiversity.� To enhance proactive participation of companies in biodiversity.� To manage the biodiversity risks through companies’ actions in

accordance with the principles of the declaration

March 17,2009

14

15

• A self-regulatory programme to reduce CO2 emissions(Social commitment)

• Voluntarily participated by 34 industries in industry and energy-converting sectors

• Each of the 34 industries which participate in the Keidanren Action Plan sets numerical targets for CO2 emissions reduction.

Targets can be set on a basis of;a) CO2 emissions, b) CO2 emissions intensity, c) energy consumption, d) energy intensity

• Programme-wide target:

‘to suppress the CO2 emissions in 2008-2012(on average) from industrial & energy-converting sectors below its 1990 level’

• The progress is reviewed annually.

Keidanren Action Plan on Global Warming Measures

targets Compared tofiscal 1990 targets Compared to

fiscal 1990

Federation of Electric Power Companies CO2 emissionintensity -20% Japan Aluminum Association Energy intensity -10%(from

1995)Petroleum Association of Japan Energy intensity -10% Brewers Association of Japan CO2 emission -6%

Japan Gas Association CO2 emission -37% Japan Electric Wire and Cable Makers' Association Energyconsumption

Japan Iron and Steel Federation Energyconsumption -10% Japan Auto-body Industries Association, Inc. CO2 emission -10%

Japan Chemical Industry Association Energy intensity -10% Japan Dairy Industry Association Energy intensity -0.5%/year

Japan Paper Association Energy intensity -10% Japan Brass Makers Association Energy intensity -7.5%(from1995)

Cement Association of Japan Energy intensity -3% Japan Society of Industrial Machinery Manufacturers CO2 emissionintensity -1%/year

The Electrical and Electronics Industry CO2 emissionintensity -25% Japan Bearing Industrial Association CO2 emission

intensity-13%(from1997)

Japan Federation of Construction Contractors CO2 emissionintensity -12% Japan Sugar Refiners' Association CO2 emission -20%

Japan Automobile Manufacturers Association CO2 emission -10% Japan Sanitary Equipment Industry Association CO2 emission -20%

Japan Auto Parts Industries Association CO2 emission -7% The Japan Soft Drinks Association CO2 emissionintensity -6%

Japan Federation of Housing Organizations CO2 emission -7% Limestone Association of Japan Energy intensity -6%

Japan Mining Industry Association Energy intensity -10% Japan Machine Tool Builders' Association Energy intensity -6%(from1997)

Japan Lime Association Energyconsumption -6% Flour Millers Association Energy intensity -2%

The Japan Rubber Manufacturers Association CO2 emission Japan Shipbuilders' Association of Japan Energy intensity -10%The Federation of PharmaceuticalManufacturers'Associations of Japan CO2 emission Japan Industry Vehicles Association CO2 emission -10%

Flat Glass Association Energyconsumption -15% Japan Association of Rolling Stock Industries CO2 emission -10%

IndustryIndustry

Participating Industries

16

17

• 34 industries participated (566.6Mt-CO2)

34 industries44%

34 industries83%

The coverage of the Action Plan is significantly large: the CO2 emissions of 34 industries accounts for 44% of that of Japan’s.

Coverage of the Action Plan

Establishment of the Action Plans by Each Individual Associations

Numerical Target Setting & Specified MeasuresActions for Climate Change Mitigation, etc.

Compilation (with Verification by the Keidanren Committees) & Publication as the ‘Keidanren Action Plan on the Environment’Constitution of Social Commitment

Implementation of the Action Plans by Each Individual AssociationsInternational Cooperative Schemes (e.g. CDM, Joint Implementation, etc.)

Additional Measures for Further Actions to reduce CO2)Publication of the Results,

Ensuring Credibility & Transparency

Do

Action Check

Plan

Check the Progress of the Actions by the Actual Performance (e.g. CO2 Emissions & Energy Consumption in the Previous Year)Review of the Follow-up Process by the Evaluation

Committee to Improve Credibility and Transparency

P-D-C-A cycles of the Keidanren Action Plan

18

Company

Company

Company

Company

Company

Company

An Industrial Association Keidanren

Secretariat

Data

Data

Data

Data

Data

Data

Aggregate data

Aggregate data

Aggregate data

Public

Calculation & Report

Peer Pressure

Calculation/Evaluation

Review of the Plan

Evaluation Committee for the Plan

Reviews

Governmental CouncilsCommitment

The assessment of progress is conducted every year. The overall performance is publicisedby Keidanren Secretariat.

An Industrial Association

An Industrial Association

19

Public Pressure

Expert Pressure

Keidanren Pressure

"These voluntary action plans by business operators have thus far produced results and the voluntary action plans of Nippon Keidanren are, in particular, playing a central role in countermeasures in the industrial community. The advantages of a voluntary instrument include the ease of selection of superior countermeasures for each actor based on its originality and ingenuity, the likelihood of providing incentives to pursue aggressive targets, and no procedural costs for both the Government and implementing actors. It is expected that these advantages will be further exploited in voluntary action plans by business operators."

Quoted in the Government's Kyoto Protocol Target Achievement Plan (Government Decision: 28 March 2008)

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The role of Keidanren Action Plan in Japanese Government’s Climate Change Policy

Base year: 1990 FY 2010

Total(Reduction in CO2 emissions) -12.3%Change in production 5.0%

Change in CO2 coefficient -1.5%

Change in CO2 emissions per production -15.8%21

�The Keidanren Action Plan on Climate Change started in 1997, which covers 34 major industries whose CO2 emissions account for 44% of that of Japan’s. Each industry sets its own target.

�The main reason of reductions in CO2 emissions is to improve CO2 emissions per unit of output(CO2 intensity)

�The reason of decrease of emissions per unit of output is the consequence of the steady accumulation of industry efforts in such areas as

technological innovation,the installation of energy-saving and high-efficiency facilities,fuel conversion,the recovery and use of waste energy,improvements in the operation of facilities and equipment.

Contribution Ratio

Follow-up of the Keidanren Action Plan on Climate Change

1990 2010 change

Iron & Steel CO2 emissions (Mt-CO2)

CO2 intensity (1990=100)

200.6

100

186.0

90

7.3

10

Paper CO2 emissions (Mt-CO2)

CO2 intensity (1990=100)

25.4

100

18.4

76

27.5

24

Chemical CO2 emissions (Mt-CO2)

CO2 intensity (1990=100)

64.1

100

60.2

76

6.1

24

Cement CO2 emissions (Mt-CO2)

CO2 intensity (1990=100)

27.4

100

16.4

100

40.1

0

Automobiles CO2 emissions (Mt-CO2)

CO2 intensity (1990=100)

8.44

100

4.67

58

44.6

44

Examples of Progress

22

CO2 emissions from manufactures is reducing steadily.

100 102112

122 123 125130

80

100

120

140

Energy required to produce 1 ton of iron (2005)

100

100

116124

132 133

155 159

80

100

120

140

160

180100

Energy required to produce 1 ton of cement clinker (in-process material) (2003)

100115 116

145154 155

194

80

140

200

100

Energy required to produce 1 ton of paper orpaperboard (2004-2005)

100 101 103

113

80

90

100

110

120100

Energy required to produce 1 kl of oil products 2004

100 104109 111

126135

80

100

120

140

160

100

Energy required to produce 1kWh of electricitythrough thermal power generation 2007

100 104 108113

120 123

80

100

120

140100

Energy required to produce 1 ton of electrolytic causticsoda 2004

International Comparisons of Energy Efficiency in Industrial and Energy-conversion Sectors

23

World-leading levels of energy efficiency have been achieved in participating industries.less energy, cost-cut, competitiveness and so on

International Comparisons of CO2 Emissions Reduction Potential

24

0.18

0.39

0.25

0.220.20 0.20

0.19

0.14

0.09

0.06

0.16

0

50

100

150

200

250

300

350

400

450

500

World Russia Canada US China Korea Brazil India OECDEurope

Japan Other

Mt C

O2

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

Spe

cific

sav

ings

pot

entia

l (t C

O2

per

tonn

e of

cem

ent)

Fuel CO2 Electr icity savings Alternative fuel BF slag Other clinker substitute Specific savings potential

0

2

4

6

8

10

12

14

0

500

1000

1500

2000

2500

Spec

ific

savi

ngs

pote

ntia

l GJ/

t

PJ/y

r

CHPRecycling Electricity Savings potentialHeat Savings potentialSpecific savings potential [GJ/t]

Households

1. Provision of energy-efficient products and services2. Provision of energy-efficient measures for customers3. Environment education for employees4. Practice Cool Biz and Warm Biz5. Promotion of commuting by public transportation6. Environment education in schools and other institutions

Offices

1. Strict management of air conditioning temperature2. Shifting of OA equipments and lighting fixtures to

energy-saving models3. Setting of PCs to energy-saving mode; restriction on the

use of electronic office equipment4. Introduction of energy-efficient equipment and solar

power5. Switching lights off during lunch breaks6. Less use of elevators7. Installation of insulated glass, light-filtering glass

Transportation

1. Joint shipping by all group companies2. Consolidation and centralization of distribution bases,

storage facilities3. Collaboration between distribution companies and their

clients 4. Mutual supply of products5. Use of larger ships and vehicles6. Modal shift to transportation by railroad and ships7. Introduction of fuel-efficient cars, natural gas, and energy-

efficient vehicles (including replacement) etc.

Forest preservation1. Use of domestic thinned woods for cushioning materials,

business cards, brochures, CSR and environmental reports,mulching of fields, etc.

2. Promotion of biomass energy use3. Use of rapid growth trees for truck flooring4. Maintenance and development of company-owned forests

and implementation of educational activities for employees and local communities

5. Planting of domestic varieties of trees6. Participation in corporate forest sponsorship and

ownership programs7. Participation in volunteer activities to protect forests

hosted by local governments and companies (tree planting,thinning, and undergrowth clearing)

8. Involvement with local green funds 9. Afforestation actiivies10. Efforts toward the restoration of tropical forests

Energy-Conversion and Industrial SectorsPromotion of Voluntary Action Plan

Circle of Widening Voluntary Efforts in the Commercial, Residential, Transportation, and Other Sectors

25

0.10 0.11 0.12 0.16 0.17 0.19

0.24 0.30 0.30

0.77 0.72

1.63

0.31

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

0.22 0.28 0.28 0.38

0.24 0.46

0.74 0.61 0.68

1.81

2.17

3.86

0.73

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Primary energy supply /GDP(2009)

International Comparison on Efficiency

CO2 emissions /GDP(2009)

26Source : IEA

Cont

ribu

tion

to th

e gl

obal

goa

l of h

alvi

ng G

HG

emis

sion

s

by th

e ye

ar 2

050

� Development and commercial adoption of world-leading energy-saving products and services

� Efforts to educate employees and provide information to consumers

� Reinforcement of private-led undertakings in international cooperation

� Transfers of advanced technology and expertise to motivated developing countries in compliance with international rules

Corporate OperationsIndustrial

Sector Business

Sector Transportation

Sector

� Set reduction targets assuming widespread implementation of the best available technologies for the low carbon path.* Demonstrate viability of targeted reduction levels.

Explore ways of guaranteeing reduction targets will be achieved.

Stronger collaboration with consumers, etc.

� Formulation and pursuit of sector-specific, medium- to long-range technology development road maps leading to the creation of a low carbon society on a global scale

Year

202

0: S

tren

gthe

ning

of d

omes

tic

GH

G

redu

ctio

n m

easu

res

DomesticMeasures

InternationalContributions

Development of

InnovativeTechnologies

27

Keidanren’s Commitment to a Low Carbon Society

(1) 2020Eco process•Aiming for a further improvement in energy efficiency of steel production processes, which are already the highest in the world

Eco product•By supplying high-performance steel, which is vital to creating a low-carbon society, Japanese steelmakers contribute to cutting CO2 emissions when finished products made of this steel are used.

Eco solution•Contribute worldwide by transferring the world’s most advanced energy-conserving technologies to other countries (mainly developing countries) and increasing the use of these technologies.

The 2020 goal is to aim for a reduction of about 5 million tons of CO2 emissions (emission reduction vs. business as usual in 2020, excluding reduction from improvement in electric power emission coefficient), which is based on the maximum use of the latest technological advances and 2020 crude steel output of 119.66 million tons. This is the long-term energy supply-demand outlook (recalculated) of the Advisory Committee on Energy and Natural Resources. (Cost of this reduction is about ¥1 trillion.)

(2) Long term~ Breakthrough R&DDevelopment of revolutionary steelmaking processes (COURSE50)Cut CO2 emissions from production processes about 30% by using hydrogen for iron ore reduction and collecting CO2 from blast furnace gas. The first production unit is to begin operations by about 2030*. Goal is widespread use of these processes by about 2050 in line with timing of updates of existing blast furnace facilities. *Assumes establishment of economic basis for CO2 storage infrastructure and creation of a practical unit using these processes.

Goal is reduction of 5 million tons

Estimated contribution of 30 mil. tons

Estimated contribution of 70 mil. tons

18.81 million ton contribution in FY2009(Products included: Production of 8.3mn tons, 8.6% of total crude steel output)

FY2009 contribution was 33 million tons

28

Steel Industry’s action plan to the Low Carbon Society

If next-generation automobiles such as electric vehicles become more popular, CO2 emissions reductions can be expected.

If all mini-vehicles in Japan are replaced with electric vehicles, CO2 emissions are expected to be reduced by approximately 25million t-CO2 per year, which is equivalent to approximately 2% of CO2 emissions in Japan , although CO2 emissions form electricity would increase by 14 million t-CO2.

[Characteristic of electric vehicles]�CO2 emissions is low(Approximately 30% compared to gasoline vehicles).�Total efficiency is high.�Fuel cost is low(approximately 1/4 to 1/10 of gasoline vehicles).

29

The Effects of Electric Vehicles

The Cement, Power and Steel Working Group will build upon the scope of work introduced under corresponding Asia Pacific Partnership Task Forces.

30

CO2 emissions

GDP

Energy Consumption GDP

Energy Consumption

PopulationPopulation

Fundamental Rights

Carbon Intensity to EnergyEnergy Efficiency

Low Carbon Primary Energy

NuclearRenewable(Solar, Wind, Biomass, etc.)

Coal with CCS

Energy Saving

Energy Efficiency of ComponentsInnovative Technology including materialsSocial System

CO2 Emission

31

�Employment�Income�Tax�Social Securityetc.

KAYA Identity

Technology Improvement/Development

32

CO2Emissions

real fuel efficiency CO2 Emission Factor Travel

fuel efficiency running factorin catalog

Improvement of Car Technologies

Technologies Dissemination

Improvement of Traffic Flow

Improvement of infrastructure

Eco-drive

Less- carbon Fuels

CO2-Free Power Generation

Modal shift

the Japan Automobile Manufacturers Association, Inc. (JAMA)

(measures)

Thank you very much

for your attention!

33